The landmark change will enable villagers access banking facilities. Through this move Sibal wants to give banking facilities to the rural masses and commented, "We want to commercialise the department. We will seek a license from the RBI to convert all our post offices into banks."
The "postal banks" apart from giving access to modern banking facilities will reduce the dependence of villagers on informal lenders for their credit requirements. Sibal stated, "The State Bank of India can"t build branches all over India, but there are post offices across India. The branches are already there, so infrastructure expenditure is not required. So you can actually give banking facilities at relatively lower costs, which would be extremely beneficial to people."
The post offices although is seeing a decline in activity over the years, offer various financial services like savings bank, postal life insurance, pension payments and money transfer services. Post office' total corpus stood at Rs. 5,82,832.9 crore as on Mar 31, 2011. The DoP"s revenue grew 11 per cent to Rs. 6,954.09 crore in 2010-2011 from Rs. 6,266.70 crore in the previous fiscal. But there has been slump in growth in some circles creating a deficit for the Department of Rs. 6,625 crore in FY"11 that is almost equal to the annual revenue of the Department.